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LIMRA Survey Shows Consumer Pessimism but no Panic
10/27/2008
WINDSOR, Conn., Oct. 27, 2008 – Despite a sharp increase in pessimism about the U.S. economy, most consumers are sitting tight when it comes to their investments, savings, banking or insurance arrangements as a result of the financial crisis, according to a LIMRA survey.
“Even with the overwhelming news coverage of the current economic crisis, only 16 percent of consumers surveyed have taken any action with regard to their financial portfolios,” said Robert Baranoff, LIMRA senior vice president for member benefits. “More than two-thirds of consumers felt the economic conditions in the U.S. were ‘very unfavorable’ in October—up from 49 percent in March; during the same seven-month period, the number of consumers who felt that conditions would improve within the next 12 months more than doubled.”
The latest survey was done in mid-October, following an earlier poll in March. Of those consumers who said they took action, the most common were to reallocate funds within retirement accounts or simply to check their balances.
The survey also found that consumer confidence in financial institutions, like stock brokerages and investment firms was lower than in insurance companies; and even fewer consumers felt confident in government regulators.
When asked how they plan to adjust their finances in the future, 52 percent said they plan to reduce debt; 41 percent will delay making investments; 21 percent will put off buying insurance; 12 percent will reduce contributions to their retirement plan; 11 percent will take money out of non-retirement savings and investments; and five percent will cancel or reduce their insurance (but six percent plan to purchase more).
Only 15 percent of consumers said that they had consulted with a financial advisor during this economic crisis but two-thirds of those who did felt reassured. Most were advised to “stay the course.”
About LIMRA International
LIMRA International is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness. Visit LIMRA at www.limra.com.